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Why Solar Energy Shares Jumped and Plunged, All in One Day

Solar stocks were all over the place again on Thursday.

What happened 

Solar energy stocks had a strange day Thursday, to say the least, with some up big and others dropping like a rock. Most notably, Enphase Energy‘s (NASDAQ:ENPH) shares were up as much as 9.3% before closing up 8.2%. ReneSola (NYSE:SOL) was up 3.9% to start the day only to drop to a 19.1% loss before ending the day down 10.5%. SunPower (NASDAQ:SPWR) was also up 1.3% at one point before falling 13.5% and eventually finishing 1.1% higher for the day.

Investors should be used to volatility in solar stocks right now, but these violent swings are out of the ordinary. Shares of small-cap stocks like this have not only been the target of short-sellers recently, they’ve also been mentioned as potential short-squeeze candidates, which can make shares very volatile in the short term.

Home with large solar installation on the roof.

IMAGE SOURCE: GETTY IMAGES.

So what

Despite the wild day, there was some notable news about each of these companies today. Enphase Energy announced a new chief marketing officer, Allison Johnson, who joined the company with experience at PayPal Holdings and Apple that could help Enphase in its transformation to a more digital company.

ReneSola completed a previously announced offering of 10 million American depositary shares, at $25 per share. The effect was actually to push shares sharply lower than the offering price. This left those buying the offering with a loss, but will give ReneSola more funds to pursue growth opportunities.

Over at SunPower, the company’s head of policy and strategy, Suzanne Leta, has been elected to the Solar Energy Industries Association board of directors. This will give the company a first-hand look at the industry’s largest lobbying effort in Washington.

Now what

All this news is notable for investors, but not typically the kind of news that moves stocks. Even ReneSola’s move lower after a share offering is unusual because the pricing of the deal was announced on Monday.

The recent move in solar energy shares is a lot of noise ahead of what’s really important for shareholders. Over the next few weeks, we will get earnings reports from solar companies. They’ll tell us what they expect in 2021 and if margins will rise as subsidy extensions in the U.S. put a little less pressure on pricing.

I think there are still a lot of tailwinds behind the industry long term, but there’s volatility ahead, too, especially if these stocks are targets of short-term traders.

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